Builders Rethink ‘Active Adult’ Housing Label

Sales have picked up at the Savannah in Westfield, pictured above, and below, at a recent open house. But developers at other age-restricted communities are struggling.Credit
Nancy Wegard for The New York Times

WESTFIELD

“I HAVE to admit I thought we’d sell them all within six months,” said James Ward, the builder of 35 lavish condominiums for buyers 55 and over at the Savannah building here, which opened for sales two years ago.

This spring — after some buyers were permitted to “live free for a year” in units priced from $850,000 to more than $1.5 million, and also to receive free help with fixing up and selling the homes they were moving out of — 20 Savannah units are sold, a few more than half.

On the other hand, Mr. Ward said, “things seem to have changed in the last six months.” Seven contracts were signed in that period, and four of those sales are set to close quickly, two in June and two in July. “It is a legitimate flurry,” Mr. Ward said, “and we think it is because people are finally able to sell their previous houses, because the overall housing market is loosening up.”

But a flurry in Westfield is just a tempest in a particularly attractive teapot, in the view of other builders and analysts familiar with the “active-adult” housing market in the state.

“It is not a trend, or a sign of a significant uptick in the market for active-adult residential,” said Jeffrey G. Otteau, a real estate analyst. In the State Legislature last year, his company, the Otteau Valuation Group of New Brunswick, worked to buttress builders’ case for converting projects from age-restricted to regular-market housing.

With that law now in place, “many dozens” of developers have filed applications with local planning authorities to switch the nature of their approved, partially built or built projects, Mr. Otteau said. He now spends much of his time testifying before municipal boards on their behalf.

There is about a 16-year backlog of available age-restricted inventory, according to the Otteau Group, if you include those projects on which construction is approved but not yet started.

A guest bedroom inside the Savannah.Credit
Nancy Wegard for The New York Times

In Absecon, a beach community in Atlantic County, a first building was completed last year, but no sales followed, and work stopped. Work was also halted on Windsor Court in Rochelle Park.

K. Hovnanian, a large builder of age-restricted, as well as market-rate, housing in New Jersey, has done no work on a long-planned project in Monroe under its Four Seasons brand. Nor has it moved ahead with approved construction of a Four Seasons in Princeton.

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“We plan to have model units available in mid-September,” Mr. Caporaso said. The single-story units will range in size from 1,950 to 2,300 square feet, with two bedrooms, or two bedrooms plus a den, and two spaces in a ground-level garage.

“We made the decision to go ahead over the winter,” Mr. Caporaso said, “because we believe the market is going to start to turn, probably slowly. But we wanted to have something ready by late this year, so it could be in full swing by 2011.”

Six hundred people have signed up online or in person as “interested,” he added.

K. Hovnanian representatives also said that sales had proceeded “consistently” at Four Seasons at Great Notch in Little Falls, an 800-unit project priced from the mid-$300,000s to the mid-$600,000s, where a new building is now under construction. They added that only one unit remained to be sold at the Four Seasons at the Promenade in Warren, where prices range from the mid-$700,000s to the mid-$900,000s.

Mr. Otteau called K. Hovnanian one of the most experienced and savvy builders of age-restricted housing in New Jersey.

Nevertheless, he ascribed the success of certain K. Hovnanian projects to location “more than anything else.”

Like the Savannah in Westfield, a block from a train station, the Great Notch property enjoys quick access to Manhattan, Mr. Otteau noted. It is only about 13 miles away, not far from the Lincoln Tunnel and various mass transit centers.

In general, Mr. Otteau said, the pressures weighing against more age-restricted development continue to mount: a sharp decline in accumulated wealth for those 55 and over; an increase in the rate of departure of higher-income residents; and a sharp reduction in the number of those who will turn 55 after the baby boom generation has moved on to its 60s and beyond.

“Always, real estate is local,” Mr. Otteau said. “Some active-adult projects in select communities where there is demand can succeed. But the overwhelming trend is that they will not be successful.”

A version of this article appears in print on May 9, 2010, on Page RE11 of the New York edition with the headline: Rethinking the ‘Active Adult’ Label. Order Reprints|Today's Paper|Subscribe